[Federal Register Volume 66, Number 209 (Monday, October 29, 2001)]
[Notices]
[Pages 54557-54558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27132]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44971; File No. SR-BSE-2001-06]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Boston Stock Exchange 
Amending the Transaction Fee Schedule and the Floor Operations Fee 
Schedule

October 23, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on September 29, 2001, the Boston Stock Exchange 
(``BSE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by BSE. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 54558]]

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Transaction Fee 
Schedule to revise the monthly transaction related revenue the BSE must 
generate before it shares excess revenue with eligible firms. 
Additionally, the Exchange proposes to amend the Exchange's current 
Floor Operations Fee Schedule to include fees for the trading of 
securities listed on The Nasdaq Stock Market, Inc. (``Nasdaq'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, BSE included statements 
concerning the purpose of and the basis for the proposed rule change 
and discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. BSE has prepared summaries, set forth in Sections A, B, 
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Revenue 
Sharing Program highlighted on the BSE's Transaction Fee Schedule. 
Currently, the minimum amount of monthly transaction related revenue 
the BSE must generate before it shares excess revenue with eligible 
member firms is $1,500,000. The BSE proposes to revise this amount to 
$1,700,000 to meet the budgeted costs of operating the Exchange in the 
upcoming fiscal year.
    The Exchange also proposes to implement a transaction fees schedule 
for the trading of Nasdaq securities, similar to the transaction fee 
schedule currently in place for exchange-listed securities. However, 
three exceptions will apply. First, all Specialist Trade Processing 
Fees will be capped for all Nasdaq specialists for a period of two 
years, commencing with the inception of Nasdaq trading on the BSE. 
Presently, the Exchange caps these fees in instances in which there are 
competing specialists, under the Exchange's Competing Specialist 
Initiative, in listed securities. The BSE is not seeking to extend the 
Competing Specialist Initiative to the trading of Nasdaq securities at 
this time. Nevertheless, the Exchange proposes to extend similar 
Specialist Trade Processing Fee caps to Nasdaq specialists to allow the 
Nasdaq trading program to develop and mature over a two-year period.
    The second exception applies to the way in which securities are 
ranked for transaction fee caps. Presently, the Exchange categorizes 
listed securities into various tiers for this purpose. The securities 
are categorized based on Consolidated Tape Association (``CTA'') Trade 
Rank. Obviously, this measure is not applicable to Nasdaq securities, 
so the Exchange is proposing to use Nasdaq share volume as an 
equivalent standard. The Nasdaq share volume will serve the same 
purposes as the CTA Trade Rankings, and will allow the Exchange to 
categorize Nasdaq securities in a similar fashion to listed securities, 
in various tiers.
    Lastly, the Exchange proposes to ``pass through'' all third party 
fees billed to the Exchange on behalf of the specialists who are 
trading Nasdaq securities. The fees will pass through on a pro rata 
basis for all fixed fees, and on an actual basis for all variable fees.
2. Statutory Basis
    BSE believes that the proposed rule change is consistent with the 
provisions of section 6(b)(4) \3\ and section 6(b)(5) \4\ of the Act, 
which require, among other things, that the BSE's rules be designed to 
provide for the equitable allocation of reasonable dues, fees and other 
charges among the Exchange's members and other persons using its 
facilities, that the BSE's rules must be designed to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest, and is not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.\5\
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    \3\ 15 U.S.C. 78f(b)(4).
    \4\ 15 U.S.C. 78f(b)(5).
    \5\ The Commission added Section 6(b)(4) of the Act to the 
Statutory Basis Section of the notice at the request of the BSE. 
Telephone discussion between John Boese, Attorney, BSE, and 
Christopher B. Stone, Attorney Advisor, Division of Market 
Regulation, Commission (Oct. 19, 2001).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    BSE does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) \6\ of the Act and Rule 19b-4(f)(2) thereunder \7\ as 
establishing or changing a due, fee, or other charge paid solely by 
members of the BSE. At any time within 60 days of the filing of such 
proposed rule change, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate, in the public interest, for the protection of investors, 
or otherwise in furtherance of the purposes of the Act.\8\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(2).
    \8\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
BSE. All submissions should refer to File No. SR-BSE-2001-06 and should 
be submitted by November 19, 2001.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-27132 Filed 10-26-01; 8:45 am]
BILLING CODE 8010-01-M